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lease office space and equipment from petitioner. Petitioner
reported gross receipts in the amount of $266,072 for 1995. This
is an increase from petitioner’s reported gross receipts in the
amount of $94,000 for 1994. Petitioner failed to reconcile its
increase in gross receipts with its claim to have suffered
devastating adverse impacts from Kaufman’s suspension.
As evidence of petitioner’s abandonment of tangible assets,
petitioner provided a document entitled “JHK Enterprises
Equipment Schedule as of 12/1/96” (the equipment schedule). The
equipment schedule is a list of tangible assets. Some of the
assets are listed as “In Service”, others as “Abandoned”, and
still others as “1/2 Abandoned 1/2 In Service”. The equipment
schedule does not list a date of abandonment or a method of
abandonment for any asset. The equipment schedule does not
reflect that petitioner abandoned any tangible asset during 1995.
At most, it reflects that petitioner abandoned some tangible
assets before December 1, 1996.
Petitioner has not established that it abandoned any
tangible asset in 1995. Aside from self-serving testimony of
petitioner’s president, petitioner has not provided any evidence
that it abandoned tangible assets during 1995.
Assuming, for the sake of argument, that petitioner
abandoned tangible assets during 1995, petitioner’s loss
deduction would be limited to its adjusted basis in the abandoned
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